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What Drives Invoicing Currency Choices

Sjögreen Gleisner, Theo LU (2022) NEKH01 20221
Department of Economics
Abstract (Swedish)
This paper examines the effects of key macroeconomic and trade variables on invoicing currency patterns. Departing from common model assumptions of complete local currency pricing or partner country pricing, the existing analytical and empirical literature suggests a range of macroeconomic and strategic determinants of internationally trading actors’ currency usage. Using panel data on trade invoicing currency spanning 24 countries from 2010 to 2016, I examine the effects of key economic variables on export invoicing currency choices on a country level. My main analysis consists of linear panel regressions with subsequent coefficient tests, where yearly country-level data on euro, dollar, and home currency invoicing shares is used along... (More)
This paper examines the effects of key macroeconomic and trade variables on invoicing currency patterns. Departing from common model assumptions of complete local currency pricing or partner country pricing, the existing analytical and empirical literature suggests a range of macroeconomic and strategic determinants of internationally trading actors’ currency usage. Using panel data on trade invoicing currency spanning 24 countries from 2010 to 2016, I examine the effects of key economic variables on export invoicing currency choices on a country level. My main analysis consists of linear panel regressions with subsequent coefficient tests, where yearly country-level data on euro, dollar, and home currency invoicing shares is used along with data on inflation, economy size, trade openness, and US as well as euro area prominence as trade partners. I find evidence that higher inflation is associated with less home currency invoicing and more US dollar invoicing; that higher trade openness is associated with less home currency invoicing and more invoicing in the US dollar and the euro; and that the US and the euro area’s prominence as export destinations positively affects invoicing shares in their respective currencies. (Less)
Please use this url to cite or link to this publication:
author
Sjögreen Gleisner, Theo LU
supervisor
organization
alternative title
A Country-level Study of Invoicing in International Trade
course
NEKH01 20221
year
type
M2 - Bachelor Degree
subject
keywords
Trade, Invoicing, Currency, Macroeconomics
language
English
id
9098372
date added to LUP
2022-10-10 08:51:18
date last changed
2022-10-10 08:51:18
@misc{9098372,
  abstract     = {{This paper examines the effects of key macroeconomic and trade variables on invoicing currency patterns. Departing from common model assumptions of complete local currency pricing or partner country pricing, the existing analytical and empirical literature suggests a range of macroeconomic and strategic determinants of internationally trading actors’ currency usage. Using panel data on trade invoicing currency spanning 24 countries from 2010 to 2016, I examine the effects of key economic variables on export invoicing currency choices on a country level. My main analysis consists of linear panel regressions with subsequent coefficient tests, where yearly country-level data on euro, dollar, and home currency invoicing shares is used along with data on inflation, economy size, trade openness, and US as well as euro area prominence as trade partners. I find evidence that higher inflation is associated with less home currency invoicing and more US dollar invoicing; that higher trade openness is associated with less home currency invoicing and more invoicing in the US dollar and the euro; and that the US and the euro area’s prominence as export destinations positively affects invoicing shares in their respective currencies.}},
  author       = {{Sjögreen Gleisner, Theo}},
  language     = {{eng}},
  note         = {{Student Paper}},
  title        = {{What Drives Invoicing Currency Choices}},
  year         = {{2022}},
}